Insurance is a necessary part of protecting your business from liability, and as the need for protection grows, so has the field of insurance.
Whether you want to safeguard your business' physical property, prepare for suits from slips and falls, or buttress your online reputation from the slings and arrows of social media, your business needs to be insured.
Check out these five key types of insurance your small business may need:
1. Property Insurance
Just as homeowners should protect their properties with homeowner's insurance, your business' physical location should be protected by property insurance. Basic plans will provide coverage for damage by:
- Water sprinkler systems,
- Riots, and
More expansive coverage will potentially cover liability stemming from dangerous conditions on the premises.
2. Social Media Insurance
A need to protect a business' online reputation has given rise to a newer type of insurance plan: social media insurance. If your business falters due to a social media intern's blunder or a Twitter mistake, you'll want coverage to potentially buoy the fallout to customer goodwill.
3. Cyber Insurance
In addition to the loss of sales that can come from online reputation damage, this kind of insurance can also cover damages stemming from data breaches or cyberattacks. The average cyberattack on a small business costs nearly $9,000, which can be crippling to a nascent company. Cyber insurance could be your safety net against these sorts of cyber pitfalls.
4. Key Person (aka Key Man/Woman) Insurance
Key person insurance is essentially a life insurance policy on a key member of a small business. Entrepreneur notes that key person insurance can keep a valued employee's or executive's death from becoming the death of the company. This may not be necessary for sole proprietors, but when a company is made up of only a handful of key members, it could be invaluable.
5. General Commercial Liability Insurance
Commercial liability insurance generally covers injuries that your company causes to third parties. This coverage typically includes the cost of defense attorneys, mediation, trial, and potentially settlement funds. Depending on the nature of your business, you may wish to purchase additional coverage for specific risks.
This is just the tip of the insurance iceberg, and having multiple insurance policies may ensure your small business is better insulated from future issues. If you want advice assessing your risks and finding the best insurance policies for your small business, consult with an experienced commercial attorney in your area. He or she can advise you of state law, and which insurance policies might be right for your small business.
Editor's Note, July 26, 2016: This post was first published in July 2014. It has since been updated.